Business Benefits to Leasing a Vehicle
by Startacus Admin
Business car leasing is becoming an increasingly popular way for companies to provide vehicle solutions for their employees or themselves. You will find that more and more 
people choose to look online for personal leasing options if a company car isn’t available to them rather than make a personal purchase for lots of reasons. It is cost-effective, allows you to switch up your vehicle more regularly as well as a whole range of other benefits.
If you are looking at leasing as a business option, have a look at some of the advantages below.
There are Tax Benefits Available
If you lease a car via a VAT registered company – you are able to claim 50% VAT on the monthly payments back. If your chosen vehicle is a van, you can then claim the full amount back. The only exception to this is if you are using the vehicle for personal reasons, if it’s privately used – then nothing can be claimed back in terms of VAT.
The cost of the monthly lease however, can be claimed against the profits – although the percentage can vary. If your car emits less than 160g/km – 100% can be claimed back, if it emits more than that only 85% can be claimed. It’s always worth checking in on that before agreeing to any lease.
Your Money isn’t Tied up in a Depreciating Asset
We all know that cars lose their value as soon as they are driven out of the showroom. The only issue with that is, you have already invested a lot of cash in the car. If you 
choose to lease a car rather than buy – this means that your money isn’t tied up in something that’s depreciating in value and can be used in investments.
It’s a Good Accounting Solution
If you are using business contract hire – this means that the financial liability of this doesn’t need to show up on your balance sheet.
Do I Have to Pay Company Car Tax?
You may have to pay company car tax depending on your situation. If you use the car for personal use (even if this is driving to and from work) – then you will be eligible to pay tax. If you decide to leave your car at your workplace overnight, or if it’s not used at all personally, then you don’t need to pay tax.
If you fit the below criteria – you will also be exempt from company car tax:
- You are a partner in the company, or in partnership
- If you are part of a limited liability partnership
- You are a sole trader
If you are looking for a car either as an employer or as an employee – then business car leasing is definitely a viable option. It could save you on tax, be a great accounting solution – and is a perfect excuse for you to change up your vehicle when you feel like it.
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Published on: 16th April 2018
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